CHARLOTTE, Carolina North (Reuters) - Wells Fargo & Co (WFC)(N) and U.S. Bancorp (USB).(N) such low interest rates have been tightening ready profits, but improve the quality of credit helped both banks poster of higher fourth-quarter earnings.
Analysts and investors made NET-based figures on the impact of lower interest rates and a reluctance by businesses to take advantage of their lines of credit.
"It's a mixed bag by watching these banks," said analyst Shannon Stemm of Edward Jones in St. Louis. "It is fresh improving income but is loan demand and interest income still remains weak.
Shares of Wells Fargo Bank no. 4 U.S. by assets, fell 1.4 per $100 in 32.00 in early afternoon trading, while U.S. Bancorp, the fifth U.S. commercial bank, declined 3% to $26.50.
The banking sector performs more lending to consumers and businesses.
U.S. Bancorp said total average loans increased by 2% a year earlier, and Wells Fargo said total of loans has increased by 0.4% in the third quarter.
Analysts and economists have said that an increase in the loan business is a key cog in the continuing economic recovery. But first quarter figures suggests business - everything by removing the new loans - are reluctant to use them.
U.S. Bancorp said companies to the bank credit lines, but were not actively borrowing them.
The use of the commercial line - or the amount borrowed in available credit - money firms fell to 26% in the fourth quarter, a record low and down 30% in the third quarter.
"We look forward to the day use dates," U.S. Bancorp Director General Richard Davis said on a conference call with analysts.
QUALITY OF ASSETS
Analysts said that despite the slow growth ready, banks balance sheets are beginning to show signs of health after three years of crisis and recession.
"Banks are starting a return to normal compensation, Foundation" said Guggenheim Securities LLC analyst Marty Mosby. "Right, quality of assets has now get healthy, and that happens at a much faster pace that I think many of us expect."
Fourth-quarter profit increase in Wells Fargo arises partly release of 850 million in loan loss reserves, as the Bank said its loans problem has continued to shrink. Compromise NET load has decreased by 29% a year earlier.
U.S. Bancorp posted 25 million in loan loss reserves over the period, the company the first such move since 2008.
Citigroup (C.N) also took a great reserve release in the fourth quarter, raising concern among analysts of the quality of its results.
MARGIN PRESSURE
But improving credit did not offset the reduction in net interest margin or receives money from a bank in the interest of loans against what he pays for deposits.
As the Federal Reserve continues to hold low U.S. interest rates, banks have little flexibility on what they require loans and what they pay for deposits.
Heading in 2011, U.S. Bancorp and Wells Fargo said net interest margin would remain stagnant or shrinking.
Said Davis margin net interest of U.S. Bancorp of 3.83 percent which decreased 3.91% in the third quarter continue to contract at the same pace in the first three months of 2011.
A margin of net interest of Wells Fargo also declined, to 4.16% from 4.25% in the third quarter.
The Bank has posted an increase of 21% in the fourth quarter profit at 3.4 billion dollars, or 61 cents a share, meet the expectations of analysts, according to Thomson Reuters I/B/E s /.
U.S. Bancorp posted a jump from 61 percent in net income. Earnings per share of 49 cents bat average estimate of analysts 3 cents.
City of Hudson Bancorp (HCBK).(O) also reported results on Wednesday, beating expectations, but the warning that net interest margins in 2011 may refuse for the fourth quarter levels. Hudson shares sank to 6.8% in afternoon trading.
(Reports by Joe Rauch and Jonathan Spicer, written by Ben Berkowitz and Joe Rauch.) (Editing by Lisa Von Ahn and John Wallace)
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